The trustee for what was once a high-flying telecom company that became one of the biggest flameouts in the United States is suing several ""affiliates"" of the Canadian Imperial Bank of Commerce, alleging they reaped $2 billion (U.S.) from insider trading.

The trustee for what was once a high-flying telecom company that became one of the biggest flameouts in the United States is suing several "affiliates" of the Canadian Imperial Bank of Commerce, alleging they reaped $2 billion (U.S.) from insider trading.

The suit was filed yesterday in New York by the trustee of Global Crossing Ltd.

None of the allegations has been proved in court.

During the technology boom, Global Crossing was a Bermuda-based telecom firm.

The company later collapsed, sunk by the weight of massive debts, but has since emerged.

Yesterday, the Global Crossing trustee filed a suit in a New York bankruptcy court, naming 33 defendants the trustee alleged are "liable for their participation in insider trading in the common stock of Global Crossing Ltd."

The suit alleges that the group acted to artificially boost Global Crossing's share price and then sold billions of dollars worth of stock.

Moreover, the lawsuit alleges that inflated revenues caused Global Crossing to take on more debt than the company could handle, thereby contributing to its collapse.

"From Global's inception in March 1997 through its bankruptcy in January 2002, Defendants were controlled by or acted in concert with the CIBC Entities and their officers, several of whom sat as directors on Global's board," the trustee alleges in court documents.

"While Global's accounting manipulations and misstatements were concealed from the public, Defendants made an enormous profit throughout the years 2000 through 2001 from selling their artificially inflated shares of Global," the documents allege.

The suit names several entities described as affiliates of the bank.

Calls to two CIBC spokespeople and some of the people named in the suit, made after business hours, were not immediately returned.

Yesterday's lawsuit alleges that the defendants sold many of their Global Crossing shares while manipulating and misstating Global Crossing's financial condition to the public.

The directors and others "engaged in a multiyear scheme to provide themselves, the CIBC Entities, and the Defendants with profits from insider selling and other ill-gotten compensation from self-dealing transactions with Global, while leaving Global and its creditors to hold the bag," the suit alleges.

It alleges that CIBC, through subsidiaries CIBC Wood Gundy, CIBC Oppenheimer and CIBC World Markets, was an original investor in Global Crossing and provided commercial and investment-banking services, underwriting services and advisory services.

In return, the suit alleges, CIBC entities received at least $58.7 million in fees, more than 48.6 million shares of stock (which split two for one in 1999) and as many as five seats on the company's board of directors.

Global Crossing was born in late 1996, when Gary Winnick and partners began planning the financing of a fibre-optic cable under the Atlantic Ocean between the United States and Europe, the court documents state.

One of the first things Winnick did was approach Bruce Raben, a former colleague who had since joined CIBC in Los Angeles, the documents state.

Raben relayed Winnick's plans to Dean Kehler, Andrew Heyer and Jay Bloom, all managers of CIBC's high-yield bond department in New York. CIBC invested $38 million for 38 per cent of the common stock of Global Crossing Ltd., a Cayman Islands company that eventually came to hold all of the stock of Global Crossing's operating subsidiaries.

The stock cost CIBC $1 per share, the equivalent of 33 cents per share when adjusted for later stock splits, the suit alleges.

"Fifteen months later, when Global offered its stock to the public, CIBC's stake in the company had a market value of $926 million," the suit adds.

Global Crossing went public Aug. 13, 1998. By the end of that year, the company's market capitalization had risen to more than $9 billion as the stock surpassed $45.

"As the price of Global's shares rose, CIBC made plans to sell, based upon the inside information on Global's true financial condition," the suit alleges, later adding that, "even as the CIBC Entities were continuing to dispose of their holdings in Global, the CIBC Directors (on Global's board) and the other Insiders continued to lend their affirmative support to misleading statements about Global's financial condition."

CIBC also had a major role in Global Crossing's raising of about $9.2 billion through debt offerings to investors in 1998 and 1999, the suit said.

In the court documents, the trustee asks for a disgorgement of profits allegedly made by the defendants from insider trading. The documents also ask for relief in the form of a trust imposed on the profits, and that there be an accounting of the profits.